Stello Corporation's stockholders' equity on December 31, 2014 was as follows:
On January 1, 2015, Kaprelian Corporation paid $300,000 for a 90% interest in Stello's common stock. On January 1, 2015, the book values of Stello's assets and liabilities were equal to fair values. On January 2, 2015, Kaprelian Corporation paid $100,000 for a 90% interest in Stello's preferred stock.
Required:
1. Determine the book value of the common stockholders' equity for Stello Corporation on January 1, 2015.
2. Prepare the journal entry(ies) on January 1, 2015 for Kaprelian Corporation.
3. Prepare the journal entry(ies) on January 2, 2015 for Kaprelian Corporation.
4. For the year ending December 31, 2015, Stello Corporation reported net income of $50,000. Stello Corporation declared and paid dividends of $10,000 to preferred stockholders and $10,000 to common stockholders. Prepare the journal entries for Kaprelian Corporation relating to this information.

Question

Stello Corporation's stockholders' equity on December 31, 2014 was as follows:
  On January 1, 2015, Kaprelian Corporation paid $300,000 for a 90% interest in Stello's common stock. On January 1, 2015, the book values of Stello's assets and liabilities were equal to fair values. On January 2, 2015, Kaprelian Corporation paid $100,000 for a 90% interest in Stello's preferred stock.
Required:
1. Determine the book value of the common stockholders' equity for Stello Corporation on January 1, 2015.
2. Prepare the journal entry(ies) on January 1, 2015 for Kaprelian Corporation.
3. Prepare the journal entry(ies) on January 2, 2015 for Kaprelian Corporation.
4. For the year ending December 31, 2015, Stello Corporation reported net income of $50,000. Stello Corporation declared and paid dividends of $10,000 to preferred stockholders and $10,000 to common stockholders. Prepare the journal entries for Kaprelian Corporation relating to this information.

Quizplus · Accepted Answer

The Answer of Stello Corporation's stockholders' equity on December 31, 2014 was as follows:
  On January 1, 2015, Kaprelian Corporation paid $300,000 for a 90% interest in Stello's common stock. On January 1, 2015, the book values of Stello's assets and liabilities were equal to fair values. On January 2, 2015, Kaprelian Corporation paid $100,000 for a 90% interest in Stello's preferred stock.
Required:
1. Determine the book value of the common stockholders' equity for Stello Corporation on January 1, 2015.
2. Prepare the journal entry(ies) on January 1, 2015 for Kaprelian Corporation.
3. Prepare the journal entry(ies) on January 2, 2015 for Kaprelian Corporation.
4. For the year ending December 31, 2015, Stello Corporation reported net income of $50,000. Stello Corporation declared and paid dividends of $10,000 to preferred stockholders and $10,000 to common stockholders. Prepare the journal entries for Kaprelian Corporation relating to this information.

Stello Corporation's Stockholders' Equity on December 31, 2014 Was as Follows